Because reality is beautiful.

I believe in freedom, as defined by the Wiccan Rede: “If it harm none, do what you will.”

One of the freedoms we have is to buy and sell and start and stop business. That’s a free market and it works like this: if there is demand, then the market supplies it. The higher the demand the higher the price. This makes sure the supply is never exhausted, because the higher the demand is the more the supply is rationed by price. Its self regulating, efficient, and simple. The only problem is amorality: the free market only follows the back half of the rede “…do what you will.” and completely ignores the the first part. It’s self regulating nature does not include moral regulation. The free market is just a tool; it can be used for constructive or destructive purposes or for just sort of plodding along.

If all free markets were perfect markets, the market would need little moral guidance. Simple things like: “You can’t buy or sell people” or “Only certain parties can buy and sell substance X” would be all the morality the market would need. Perfect markets mean all actors are rational, there are no hidden costs, and the buyer and the seller both have all the information they need to make a rational decision. The problem is, “free market” means free to be a perfect market, or a highly imperfect market.

Remember that a perfect market requires rationality of all actors? What about when the market actors are highly irrational? In a disaster the price of staples tends to skyrocket in a free market. Now, in a perfect market this would be a good thing. Raising the price would ration access to the supply, ensuring that vital commodities only go those who really need them and preventing the exhaustion of supply. Unfortunately, the first thing to run out at ground zero is rationality. The people who can afford the goods at any cost by all of them (far more then they need). They sit on top of their horde, and no one else gets any. (This is why the government often controls prices and access to goods in an emergency.).

In fact, I think I can make the case that irrationality is the cornerstone of the free market. There is no real, functional difference between a Chevy and a Pontiac, but people pay more for the Pontiac because they are irrational. People pay hundreds of dollars for Nike shoes that cost the Nike corporation a few dollars to produce because they are irrational. Brands, in general, are irrational. People will tell you “I like this brand because it stands for X,Y, and Z.” Actually it doesn’t. Every brand stands for the exact same thing: money for the owners. That’s it, nothing more nothing less. Various CEO’s have actually been taken to court for trying to say they had a responsibility besides money for the owners. The stock holders always won.

Because of irrationality, the free market fails to do what the perfect market does: lower the price to the lowest level the producer can sustain. Instead, the free market produces a ladder of products with the cheapest and lowest quality going to the poorest and the most expensive and highest quality going to the rich. In most of what we do, this is perfectly fine. Jim Beam bourbon is about $15 a 3/4 liter. Jack Daniels about $20, and thats just fine. I absolutely support a free market for booze, because it’s not something anyone actually needs anyway. I support a free market most of the time. When it evolves to a perfect market thats even better, but often people are too bloody irrational for that. That’s fine too. Freedom means the freedom to be irrational.

I think, however, that health-care is good case for government involvement. This is because the ladder will apply to health-care. The rich will get the very best doctors, and the poor when they can afford them at all, will get the very poorest. I think that such a situation is immoral. It’s fine and dandy for the rich to get the best houses, cars, TV’s and booze, and the poor to get the worst. It’s not so fine for the poor to get the worst health-care. I think it is immoral for people to have to die or suffer just because they are poor. I also think, in general, it is immoral to take people’s money even if you are doing it to help others. In the end, I think it is more wrong to let the poor suffer and die then to let the rich keep what they worked for.

Thus, I support a national health care plan. Research shows the single payer model to be the most cost effective, so that is the model I support. So, would I vote for the Obama plan were I allowed to? Absolutely not.

Any program which requires a large, strong, national government must be in violation of the constitution, if not in letter, then in spirit. As a result, it will be a bass-ackward band-aid whose form is characterized by what is necessary to pass through the constitution and not what is best for the American people. I cannot support any national plan, or any national goal, in the absence of 4 things: a new constitution, Condorcet voting, proportional representation, and a national assembly.

The current constitution is made for a weak, small federal government. If we need national health-care, and I think we do, we need a new constitution which produces a cohesive, rational, strong, large, federal government.

Condorcet voting: a strong, national government and the constitution which allows it can be a great assistance to the people, or an unholy terror of the Soviet type. The only way to keep the government, by, for, and of the people is democracy, and Condorcet voting is, frankly, more democratic.

Proportional representation is the same. It gives more voice to more people, and helps keep multiple parties. Condorcet voting is pretty useless if there are only two contenders for every election.

Finally, a national assembly. National programs need to be overseen by leaders elected nationally, not a national collection of leaders elected locally. All legislators need to be elected by Condorcet voting, and the Senate needs to be elected in a coast-to-coast popular election. Baring these changes, placing the national health-care in the hands of the existing system would be a cure fare worse then the disease.

Remember the bridge-to-nowhere? Get ready for the hospitals for no one.

I am a member of the US military. It’s not something I talk about on my blog a lot because there is not a lot I can say about it. I can’t say anything that would reflect poorly upon my branch, the Air Force, and it is important that in any political or religious thing I say that I make very clear what I am saying is my opinion alone, and does not in anyway constitute an Air Force or DoD agreement or disagreement with my point of view. Further, I cannot reveal any information that about what I am doing at work that you wouldn’t get from the base website, because I could inadvertently reveal sensitive information. (My job isn’t that cool; I put gas on planes, but that’s the policy.)

The above paragraph is over 100 words. It’s a pain in the rear to throw that boilerplate on any blog I do that mentions work, but this subject is important to me so I believe it is worth the hassle today. So is it clear to everyone this is my view and in no way reflects the views of the Air Force? Good. I want (surprise!) to talk about health-care. You see, when I get sick….

I go to a medical clinic which belongs to the government, whose every operational bill is paid by the government, and I see a doctor or nurse in a government uniform, whose every paycheck is signed by the government. He or she writes me a prescription which I take to the government owned pharmacy, and the pharmacist, wearing a government uniform, who is paid by the government takes the pills the government paid for, and gives them to me. And I never, ever, see a bill.

Now, there is a name for the sort of medicine where the government owns the hospital and everything in it, pays all the employees, pays for all the drugs, and never charges the patients anything, regardless of income. It’s called SOCIALIZED MEDICINE. So, if socialized medicine is so bad, why does the military have it?

The number one answer I get is that we in the military deserve our benefits. (Implying, I guess, that the unwashed, unpatriotic masses at home don’t, but that’s not my point.) My somewhat biased opinion is that the US military deserves the best health-care available. And the statistics say we have it…and oddly enough that we are very happy with it, and don’t want to have to pay our own way, or have to find which of hundreds of competing hospitals has the most affordable rates, or read hundreds of pages of insurance documents. The service members I know, don’t want more competition, or a system in which the service members who make the most, get the best care.

Do we want to fix health care? Health care is a cross roads where health-care providers, health-care consumers, health-care insurers and government all meet up. I can not talk about reforming those things without getting into pretty serious conversation what government’s role in society is, and here is my “simple” answer…

Government has a legitimate monopoly on force. If the mafia says “Give us 30% of your paycheck, every paycheck, to spend on protecting you and if you don’t we will take your stuff and/or lock you up in a small room with highly abusive people,” we would call that a protection racket, a form of organized crime. The reason the government is allowed to do this, and other groups are not, is because the government has a legitimate monopoly on force.

Under normal circumstances, a person exposes themselves to force by contract. Your collectors have the right to take your stuff if you don’t pay because you signed a contract saying it was OK. The fact that you have many contractors to choose from and that you enter the contract of your free will, makes this type of force self regulating and legitimate.

Government, on the other hand has this right regardless of contract, and there is no competition. So, in the absence of voluntary contracts serving as a control to the force, freewill is expressed through democracy.

However, democracy requires a system in order to function well. The simple will of the majority for every government tasking would be disastrous, even it it were logistically feasible. Fifty-one percent could (and would) use their power over the government to use the government’s monopoly of force to seize the money and resources of the remaining 49%.

Also, the fact that the government has monopoly on force doesn’t mean the government is the best instrument to accomplish every job. Socialism basically means the rich pay more taxes and the money taken from the rich provides for the poor. In a totally socialist state, the government would make all economic decisions for the people. Historically, this works very poorly.

Americans, justifiably proud of their economy, often complain about socialist economic control. However, if people take the time to think, few people really want a totally capitalist society, in which the supply of anything is controlled only by market demand, and not by the government’s monopoly of force.

Prescriptions are a good example. In a totally capitalist society, people could buy whatever drugs they wanted. The supply of drugs would be controlled completely by the demand for them. However, we impose non-market control over drugs, denying people access to drugs regardless of their demand because, in this case, capitalism harms rather then helps society.

Why? Because capitalism is a means to an end and not an end to itself. Capitalism is great at providing a variety of products, and using competition to drive the price of those products down, but capitalism, like many tools, is without morals. It is neither good, nor bad; it just is. Sometimes we stop capitalism from working on moral grounds.

The military is another good example. Bill Gates pays about 15 million times more taxes than the average American. Yet, he receives exactly the same level of military protection as the homeless who live nearby. That is socialism at its most basic. Yet few Americans clamor to have the US military dismantled and replaced with competing mercenary bands. We turn capitalism off and utilize the government’s monopoly of force when it seems that taking unequally from all to provide equally to all is more moral than not. In a totally capitalist economy, the rich would have the best police, the best roads, the safest airplanes, just as in our current economy they have the best cars, the best houses, and the safest neighborhoods.

Morality is the test. The poor people in a police district get the exact same protection as the rich in the same district, flying first class is just as safe as flying other classes, and the military protects us all to the same degree regardless of income, because we have decided to tax those with money, to pay for a service for all.

The government has a responsibility to protect its citizens, thus everybody pays what the government thinks they are able, to receive the exact same level of military protection. This does not mean there is a universal right to military protection, for there is no such thing as a right to a service when no contract has been made; it simply means the government has a responsibility to provide the best military the people will fund.

Health-care is no different. The government has a responsibility to protect the lives of its citizens. If 50,000 people a year die in attacks, the government acts through the military. If 50,000 a year die in traffic accidents, the government acts through the Department of Transportation. If 50,000 a year die from inaccessible health-care…well then let’s not do a fucking thing because that would be socialism?

My. God. Obviously, morality calls for the limited suspension of capitalism in this case. France has the the highest value health-care on Earth. In a few other countries, people pay less but get far less (Chad for instance). In most other countries people pay far more and get a bit less. There are three keys: (1) There is a single payer (the government) for everything; (2) The book keeping is state of the art; (3) The doctors strike regularly.

It’s that simple. In response to the will of the people, the government sets price caps as low as possible. In response to the health care providers, the government raises price caps. Between the two, the providers get the incentive they need to stay in the market, and the people get what they need to be able to afford health care.

And it will not work in the U.S. for just as simple a reason – we lack the sort of democracy that allows it. In the U.S.’s single-member-district plurality representation, it’s all or nothing; 100% or 0%. That simply will not work for government price fixing. Let us suppose the Republicans side with the doctors, and the Democrats with the “more-for-less” voice of the people.

When the regime is Republican, the doctors will do well. When the regime is Democrat, the doctors will do poorly. In a society like France’s, the doctors will always win something, but never as much as they ask for…every year. The people will always win something but never as much as they ask for..every year. In the U.S., doctors will spend 4-8 years going broke followed by 4-8 years of getting paid. Though this averages out to the same thing, the fact is after 8 lean years, doctors will be leaving the field in droves. The profession of medicine cannot survive the zero sum game (0% or 100%) method of democracy; it needs proportional representation.

If we really want health-care reform, we need to partially socialize medicine. If we want that, and we want crops of new doctors to replace the retiring ones every year, we must have proportional democracy.

Proportional democracy, however, only works for large bodies of many representatives, like the House. For things like the Senate, or the Presidency, we still need to vote for one person. No matter how democratic the House, unless the Senate and the President are elected differently, we will have made huge change with no positive effects. The two-party system would still rule the executive branch and the Senate.

For these, we need a Condorcet vote. In this system, the voter rank candidates, and the overall winner gets the seat. This breaks the back of the two-party system and puts the President and the Senate in the same democratic boat as the House.

Without these, any attempt at health-care reform is so much verbal masturbation.

Health care in the USA is troubled. 60% of all bankruptcies are due to medical debt. America pays more per capita GDP for it’s gov-care (which covers 1/3 the population and ½ the cost of all medical bills) then countries with universal gov-care for 100% of the population. By the same measure, the US also has the highest private health care expenses. Between the two, US citizens, on average pay over two times more than citizens of other nations with comparable qualities of life. Worse still, by almost any measure, the US health care system is at best, only competitive and at worst, behind other nations in over all citizen health.

Despite the objectively verifiable low value of health care in the US (That is to say, the price adjusted for exchange rate and local GDP is far higher then the same effectivity of care in other nations.) The producer’s price isn’t high enough to change consumer behavior. This is proven by the fact 33% of all mortality is preventable through life style change. (18% and 15% to tobacco and obesity/inactivity respectively). Preventable care expenses are over half the total cost of health care.

Health care is a system or network. Consisting of four major actors. The health care provider, the health care consumer, the health care insurer, and the government that regulates them. Change must be network-wide to improve the situation. Single actor change would only displace expenses onto the other actor/s.

Health insurance premiums are expensive primarily because health care is expensive. In order of dominance, the costs of health care seem to be…

(A) Over-care. All actions have risk, including inaction. The increase is procedures does not increase in expense proportionally, but exponentially, because with each action the provider takes, the person is exposed to new risks, which will require new corrective action, which will create more risk, in a cycle. The number one cause of over-care is fear of litigation.

(B.)Health care provider labor cost, primarily nurses.

(C.)Government payments cover only 85% of the cost of care. (Resulting in private costumers subsidizing the hospitals costs of gov-care patients in addition to the payroll income tax payments which paid the first 85% of the expenses.)

(D.)Administration

(E.)The requirement for all hospitals to provide free emergency room care to anyone who needs it.

Regarding insurance, in other industries, insurance, by organizational ability and economy of scale is a powerful force towards efficiency. This is not happening in the health care field. Health insurance have several points of note:

(A.)Other then the cost of claims, the primary cause of high premiums is deductibles which are proportionally low in comparison to the claim cost.

(B.)Insurance companies are not allowed to price premiums based on risk but must instead at least in part, price premiums based on government mandate.

(C.)Insurance companies have restrictions placed on their business model that other similar industries don’t have.

(D.)Insurance companies are not allowed to enter area markets based on market forces, but on government mandate.

So, whats the solution? 4A: Tort reform. 4B: Replace the universal state boards with industry designed tests based on specialization. 4C: Creation of single gov-care agency instead multiple competing ones. 4D The Canadian gov-care system has about half the administrative cost of the US system. Utilization of “best practice” is in order. 4E: Congressional moratorium of this unconstitutional unfunded mandate. 5A. Creation of tax sheltered savings accounts for funds earmarked for deductibles. 5B, 5C, 5D: The deregulation of prices and charges within the insurance industry. The new price-controlled-by-market insurance companies will be able to charge cost effectively rates for self inflicted illness, solving 2.

This is the last word on health care reform. Anything less then this isn’t reform. Anything more is government reform with a focus on health care.

The purpose of market is to provide a place for the producer and consumer to form voluntary contracts. The market has no intrinsic morals and only one rule: the best deal. The producer makes supply, the consumer makes demand. Between them, and the competition of various producers to provide for various consumers, this constant desire for the best deal drives price ever downward. It rewards the most efficient producer and the most efficient consumer alike. It’s almost a kind of magic.

Market failure doesn’t refer to a total break down of the buying and selling but a break down of the magic, of the automatic best deal for everyone. It’s not discrete point, but direction the market can go. The opposite direction leads to the perfect market. It too is not a destination but a direction, the ideal by which markets are judged.

A perfect market consists of a few key principals, describing the market as a game it looks like this: (1.) Rationality of all players in the game. (2.) No hidden costs to any move. (3.) Enough players that no single one can steer the game by their behavior. (4.) something all the players want to play with [demand] (5.) Freedom to play or not play at any point (6.) No barriers to entering or leaving the game (7.) No barriers to any player about information on any other player.

How does the medical industry fail these criteria?

Rationality of all players in the game

(1.)Well, first of all, the medical consumers are highly irrational. Short term fun at the expense of long term health is not rational, yet 80% of heat disease alone is preventable. Throw in smoking, obesity, diabetes, etc, and the single greatest killer is short sightedness. In a perfect world, doctors would serve as check on this irrationality, but the fact is, doctors are over-treating (which gets people killed) because of their fear of litigation. The consumer is crazy and so is the producer.

No hidden costs to any move

(2.)The whole field is full of hidden costs. From regulations you never heard of to taxes you can’t imagine, the medical field is a minefield of hidden costs.

Enough players that no single one can steer the game by their behavior

(3.) Well, about half of the cost is payed for by one player (gov-care), and up to 70% of the remaining half is payed for by one company per area. Normally, this would be called oligopoly, but honestly, its worse than that. Because the first half is the government, its more like a oligopoly on the second half and monopoly on the first. Under normal circumstances, even if a player owns 50% of the total market, that player can rarely take away your organization’s legal right to exist, or place members of your organization under arrest. The government has what is known as a monopoly on force. Monopoly represents a market distortion. Force, on the other hand, represents the nonexistence of market. The foundation of market is people forming contracts of their free will, ie, without threat of force.

Something all the players want to play with [demand]

(4.) Demand, we’ve got. Sort of. The fact is, while doctors may not be the paragons of reason we hope, the producer side (as is typical in other industries) is better at being rational then the consumer side. If nothing else, it’s better organized. The consumer demand is health, not care. But doctors have no economic incentive to pursue health. They have need to produce care. So there is break down between the needs of the consumer and the ability of the producer to meet that need. Note, I am not saying there is a conspiracy by doctors to keep people sick. Doctors are like most people: there’s a few true saints, a few evil bastards, and lot of pretty ethical folk. But the fact is, we must relay on doctors’ moral incentive and not their economic incentive to provide us with health. Systems work better when the two incentives are the same.

Freedom to play or not play at any point

(5.) This one absolutely does not apply. Playing in this case means the freedom to form or not form voluntary contracts. If the consumer doesn’t enter the market he suffers or dies. At the same time, if the producers do not enter the market many suffer or die. Further, hospitals must provide emergency care to everyone, regardless of ability to pay. On the insurance side, insurers must provide insurance to at a loss to certain high risk people. They must by law.

No barriers to entering or leaving the game

(6.) Well, the barriers to entering the game are enormous. Lets say we want to start a tiny private practice, with very limited services. First, the price of becoming a MD is between $175K and $200K. Then, the first year cost for 1600 square foot commercial space, a receptionist and tech who makes no benefits is about $250K­. So, minimum startup cost is right around half a million dollars. Nor can hospitals simply exit the market, they provide a community service and without them people will suffer and die. Insurance is the most heavily regulated industry in the US, so even if cash on hand was not a problem the regulations would be, but in any case, and insurance company must have the cash on hand to pay out all claims if they were all called at once. The startup costs for an insurance company are in the tens of millions.

No barriers to any player about information on any other player

(7.) This is the worst. Insurance companies use hundred page contracts written legalese on purpose, to hide the information the consumer needs to know. At the same time, insurance fraud is a huge expense, because people aren’t honest with the companies either. If people are totally honest with doctors, their premium could go up. Conversely, if doctors are honest about risks with patients, the patients will simply go to another doctor who paints a rosier picture. Again, the moral incentive is diametrically opposed to the economic one.

All in all, it’s a wonder health care is as cheap as it is. Again, I’ve hit over 1000 words, so I will post my solution(?) later. Thanks for reading all, feel free to weigh in on any of this.

I thought this was going to be an easy post. I thought, hey, the insurance companies are a bunch a bastards, but it turns out insurance companies, while not blameless, are not quite the devils I’d thought.

Basically, health insurance is expensive because (1.) Continual, long term expenses are a really stupid thing to pay with insurance. (2.) Hospital bills are really high and require high premiums. Could insurance be improved? Certainly, but it is not the real cause of high medical bills.

So, then I went into why hospital bills are so high. Basically hospital bills are high for a few reasons. (1.) Fear of litigation, rather than litigation itself, causes a lot of unnecessary stuff to be done. (2.) Hospitals are a skilled labor intensive industry, and skilled labor is very costly. (3.) The existing socialized care costs the hospital about 15% loss off of net, or about a 40% loss off of gross. Could hospitals improve administration and information management? Certainly, but those are marginal gains compared to over-treatment and labor costs.

So, can hospitals be run cheaper? Yes. Should they be? Should is a surprising long word. Every war in history has been fought between the S and the D of should. Should implies is an ideological question, not an economic one.

So lets talk about ideology. First off, do you have a right to health care? Absolutely! You have a right to life, liberty and the pursuit of happiness. Rights are tricky things though. The First Amendment says you have right to freedom of press. Does this mean the government has to assist you in setting up your own news network? Or merely that the government is forbidden from preventing you from doing such?

You do have a right to life. You have right to not have the government forbid you from seeking health care. You categorically, do not have the right to have them provide it for you. If you believe that health care is a right and the government must provide it, you must logically believe that government must provide printing presses to those to poor to afford them, protests marches to those to poor to organize them, and guns to those to poor to buy them. (Your first and second amendment rights, respectively.)

Clearly, your right to life means the government cannot prevent you from seeking health care, not that it must provide it. So, accepting that fairly obvious fact, what is the health care problem? The fact the health care consumer is complaining health care costs too much really doesn’t amount to a hill of beans. Consumer think everything cost too much. Producers think everything goes too cheap. Demand drives prices up, supply drives them down. So, what’s the problem?

Two possible ones: false expectations and market failure.

First false expectation? You are entitled to long life. Actually you’re not. No one is. Long life is combination of four things, genetics, choices, luck, and health care. You know what the leading cause of death is in the United States? Heart disease. You know why that is pathetic? BECAUSE 80% OF IT IS PREVENTABLE THROUGH LIFE STYLE CHANGE! That’s right, 80% (Harvard School of Public Health, Department of Nutrition) Over 600K people died in 2006 from heart disease, 480,000 at the end of a series of stupid ideas. Even if the US had the best health care in the world, even if by some economic miracle it was free, 20.8% of all fatalities would have happened anyway because people found health care more attractive than responsible living.

Second false expectation? The Law of Diminishing returns doesn’t apply to health. Actually it does. Moving the age of mortality from 45 to 55 takes pennies. From 55 to 65, took much more. Surgery is a risk. We choose the risk of surgery when it is lower then the risk of not having it. Unnecessary surgery means risk for no reason, and that means expense and injury. Which leads me nicely into the…

Third false expectation: Doctors will make decisions dispassionately, and never expose patients to extra risk just to cover their legal rear. Actually, doctors are people too. And the fear of litigation hangs over them like anvil on string. They order to many tests, and treat too agressively for fear of malpractice suits. Which leads finally, to the…

Forth false expectation: people are entitled to a risk free life, and are entitled to compensation when risk has consequences. No. Just plain no. Life is risk. Hospitals, treatments, etc, all have risk, and if a person is made aware of the risks and choose the course anyway, they aren’t entitled to any form of compensation.

That just leaves market failure. I try to keep my blogs under 1000 words, so I will have to write that one later.